Increasing Investment and Selectivity in Private Equity

Private Equity (PE) firms are significantly boosting investment, focusing increasingly on resilient, long-term opportunities. The spotlight is on sectors like technology, health care, and energy. Simultaneously, there is rising pressure on portfolio company CFOs to ensure that their companies maintain AI-enabled finance capabilities and are always “exit-ready”.

Understanding Exit Readiness in Private Equity

The consulting firm Accordion recently published a report titled, “Exit readiness in private equity.” This term refers to being strategically prepared for a sale or public offering, showcasing strong performance, credible growth potential, and operational improvements to attract buyers.

The Expectations vs Reality of Exit Readiness

An overwhelming majority (97%) of surveyed sponsors expect CFOs to maintain an “always exit-ready” posture, but surprisingly, only 20% of CFOs claim to operate this way in reality. Most (61%) only shift into exit mode when a sale window appears, which can reportedly reduce valuation by one to three turns of the exit multiple.

Exit readiness is defined by sponsors as active value-creation levers, integrated systems, and credible equity stories. However, CFOs surveyed tend to focus on tactical tasks, such as diligence packs and audit-ready financials. Only 32% include value creation in their definition.

The Timing of Exit Readiness Preparation

More than 80% of sponsors want exit preparation to start 12–24 months before a sale, yet half of CFOs begin just three to six months out. Over 70% of sponsors associate compressed prep with lower deal multiples, and 39% mention rushed exits as a cause of post-sale adjustments.

The Rising Importance of AI in Private Equity

A key finding of the survey is the growing significance of AI: 85% of buyers now consider AI-enabled finance when valuing companies. According to Accordion, CFOs who incorporate AI in planning, forecasting, and reporting are twice as likely to achieve smoother exits and higher valuations.

Challenges in Achieving Exit Readiness

In the high-pressure world of PE, finance chiefs live with the daily challenge of achieving double-digit returns. CFOs surveyed identified several common exit-readiness obstacles, including bandwidth constraints, fragmented systems, unclear sponsor expectations, and lack of prior exit experience – all factors which sponsors say directly impact valuation.

Pamela Stern, managing director and head of commercial excellence at Accordion, advises that CFOs need to develop “a playbook for continuous or ‘always-on’ exit readiness.” This requires integrating exit discipline into daily operations, aligning sponsors and finance teams around shared value-creation goals, and ensuring that optimization opportunities are not missed.

Contact Information

For more information, contact Sheryl Estrada.

Upcoming Event: Optimizing for a Human-Machine Workforce

Join us for our next Emerging CFO webinar, Optimizing for a Human-Machine Workforce, presented in partnership with Workday, on Nov. 13 from 11 a.m. to 12 p.m. ET. Speakers include Nitin Mittal, principal, global AI leader at Deloitte and Thadd Stricker, CFO of INRIX.

We’ll explore how leading CFOs are rethinking the future of work in the age of AI—including when to deploy AI agents to accelerate automation, how to balance ROI tradeoffs between human and digital talent, and the upskilling strategies CFOs are applying to optimize their workforces for the future.

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